Software development in the life insurance industry …Soooo boring!… Think again, it’s a lot cooler than you think!

Developers have many opportunities to grow their software craftsmanship in a life insurance company.

Martha, 31, is developing software for the next generation of „Performer Primus“. This is a fund-linked provision for children which, for example, a grandparent might set up for a grandchild as the foundation stone for a future pension policy.

Martha’s implementation method is test-first, applying the clean code rules as best she can and refactoring code that will be affected by her changes.

Why does she apply these agile practices so conscientiously?

Because long-term contracts like this can run for up to 100 years!

Let’s take a concrete example: 3 year old Julian has a new Performer Primus policy. By the time Julian dies and his pension payments end, our developer Martha will be over 130 years old and at least, I guess, enjoying her well earned retirement :-)

‘Performer Primus’ is unit-linked, so over the years various funds will have been added into Julian’s policy account and others will have been replaced. If Julian’s grandpa dies prematurely, the insurance company will fulfil it’s pledge to take over payment of the premium until Julian’s 25th birthday. Julian himself may also make further changes e.g. at some point he might increase his premium to supplement his pension.

During this long period of time, Martha’s software will need to be replaced several times, introducing new technology via migration tools, taking advantage of the latest leading edge technology. Nevertheless, it is highly likely that there will still be traces of how Martha and her colleagues once laid out the architecture, designed the processes and implemented the code including the mathematical formulas. All of these things are the software equivalent of Julian‘s printed insurance contract and we will still see Martha’s fingerprints in the code.

BTW: If this reminds you of smart contracts in blockchain, you may be thinking of the next generation of insurance software.

The importance of best-in-class Software Development

On the one hand, it’s vital that Martha produces understandable clean code in order to guarantee efficient insurance contract management over the course of a whole century. On the other hand, the software she updates is responsible for the management of previous generations of Performer Primus contracts and other life risks such as income protection or basic life insurance. In resolving this, Martha benefits from the thousands of automated unit and acceptance tests that allow her to refactor the code where appropriate.

How does Martha increase her software craftsmanship?

Taking Martha’s challenges into consideration, it’s no great surprise that insurance companies start initiatives such as coding dojos where developers continuously improve their coding and software design skills (without jeopardising the company’s core systems).

Sometimes, as in the case of the LV1871 Java Coding Dojo, these groups are open to programmers from other companies and industries in order to incorporate new ideas, concepts and approaches from outside the company.

Senior developers/architects like David Ibl (https://medium.com/@davidibl) lead the dojos and share their gained insights.

Agile practices, but does that make the company truly agile?

Life insurance companies are facing substantial challenges, driving them to become increasingly competitive. Digitalisation and FinTech are accelerating the market, creating a previously unseen amount of innovation and shortening product lifecycles. On top of this, InsurTechs are threatening insurance companies’ traditional business.

To master these challenges, insurance companies are working together on new initiatives such as the InsurTech Hub Munich which brings together key players and disruptors to collaborate on groundbreaking, innovative insurance products and services.

Moreover, companies themselves have to become faster and more agile. The prerequisites to achieve this are largely in place: if companies are working with the agile practices described above, they can change their systems quicker and have thus created a good foundation on which to become really agile and fast. (See e.g. https://medium.com/@robertweidinger65/letting-the-agile-teams-do-the-multi-project-management-51560189f616).

Another reason for preferring agile methods is that the business logic is often too complicated to be defined and documented in one step. A highly collaborative approach between business and IT departments is much more likely to be effective than a heavyweight process.

In summary, not boring! Cool!

First of all, yes, life insurance companies do develop software! (There is, of course, standard software too — but there’s always a lot to do, believe me!)

Secondly, it’s not boring at all! It’s highly satisfying to apply leading edge techniques to create high quality code with long lasting purpose.

Thirdly, the movement towards agility is a natural development — of course different insurance companies have a varying level of maturity on this subject. Check out which one you find most attractive.

Fourthly, where there is a lot of innovation there are also many challenges! This means that Martha needs more support — she is looking forward to welcome new team mates soon! So if you are a highly creative and experienced software developer who is interested to grow your skills as a software craftsman/-woman and architect in an agile team, LV 1871 would like to hear from you — now that would be REALLY cool!